Japan Bank for International Cooperation (JBIC) has signed 11 ODA loan agreements with the aggregate amount of up to ¥184.893bn with the government of India as an ODA loan package in FY2006. The amount of ODA loan package in this fiscal year increased by 18.9% from the previous year.
Since adopting the New Economic Policy in 1991, the Indian economy has achieved an average annual growth rate of 6%, with its GDP ranking the 10th largest in the world in 2004.
Moreover, in recent years, the country has drawn attention as a BRIC member. Despite this progress, 35% of India’s total population of 1.1bn is still living on less than one dollar a day, making the country home to one-third of all the people living in poverty across the world.
To accelerate poverty reduction, on which the government has placed top priority, the promotion of economic growth and the increasing of employment and income opportunities are necessary.
However, inadequate infrastructure in such areas as power and transportation has posed a bottleneck to industrial development and economic growth. In addition, India is facing increasingly serious environmental problems, including air and water pollution and deteriorated urban living conditions caused by urbanisation and deforestation.
Given the extent of these problems, they may even have direct impacts on global environmental issues. In the 11th Five-Year Plan (April 2007-March 2012), the government aimed at equitable and sustainable growth, and to achieve this goal it has designated the following as priority development issues: not only alleviation of existing poverty but also long-term poverty alleviation through economic growth and environmental conservation to make these efforts sustainable.
India has been pushing forward strategic approaches by strengthening economic and trade ties with Asean member countries, the US and other countries and by improving political and economic relations with neighbouring China and Pakistan. This has brought about the increased presence of India in the international community.
While Japan has traditionally enjoyed close historical, cultural and religious ties with India, Japan is now paying increasing attention to the country as one of the promising markets for trade and foreign investment. This is due to its recent emergence as a major IT power, as well as the existence of 300mn middle-income citizens, which is well over the entire population of Asean member countries.
When Prime Minister Manmohan Singh made an official visit to Japan in December 2006, the two countries agreed to elevate bilateral relations to a Strategic and Global Partnership and signed a joint statement where concrete actions for its establishment were laid out. This is expected to usher in closer ties between Japan and India.
Given these developments, this year’s ODA loan package will support economic infrastructure development, pro-poor rural development, and environmental improvement. The highlights of the package are as follows:
(1) Economic infrastructure development
In the power sector, JBIC will support the Bangalore Distribution Upgradation Project and the Transmission System Modernization and Strengthening Project in Hyderabad Metropolitan Area.
These projects aim to ensure stable supplies of power through upgrading and modernizing transmission and distribution networks. Bangalore, which is called the Silicon Valley of India, is a centre of India’s software industry where many foreign companies, including approximately 60 Japanese firms, have located their operations.
However, since the city is plagued by frequent power outages, a distribution automation system will be put in place to bring early recovery from outages and effective utilization of distribution facilities by making use of the technology developed in Japan for detecting locations that caused power failures.
In the railroad sector, JBIC will support the Delhi Mass Rapid Transport System Project Phase 2 (II). The project aims to reduce traffic congestion in the capital city of Delhi and relieve its air pollution, which is particularly serious even among major cities in the world, by constructing an urban rail system that includes an underground section. When rail service begins in the entire length of phase 2, 2.64mn passengers are projected to use the service every day, which exceeds the number of passengers in the Tokyo municipal subway. JBIC has already supported the first phase of the Delhi Mass Rapid Transport System Project, which was completed in November 2006.
In the port sector, JBIC will support the expansion of facilities for the port with the country’s largest annual cargo-handling volume through the Visakhapatnam Port Expansion Project.
The Visakhapatnam Port is one of the key shipping ports for exporting iron ore produced in the Bailadila Mine, a major mine in India, one of the world’s leading iron ore producing countries. As much as 30% of the iron ore which Japan imports is produced in this mine. Financial support for this project will thus lead to a stable and efficient import of iron ore to Japan.
(2) Pro-poor rural development
In many parts of Andhra Pradesh located in southern India, agriculture depends on rainwater. Therefore, JBIC will support the Andhra Pradesh Irrigation and Livelihood Improvement Project whereby irrigation systems will be newly constructed or rehabilitated farming technology will be disseminated to increase agricultural productivity. Since the northern area of Andhra Pradesh targeted by the project has a high incidence of poverty, it is expected that a boost in agricultural productivity will lead to poverty reduction.
In the northeastern state of Tripura and the western state of Gujarat, forest degradation has greatly progressed, as poor people are increasingly engaging in slash-and-burn and shifting cultivation, and harvesting excessive forest resources for fodder and fuels.
JBIC will therefore support the Tripura Forest Environmental Improvement and Poverty Alleviation Project and the Gujarat Forestry Development Project Phase 2. In these projects, aforestation activities through community participation will be conducted to rehabilitate forests that are indispensable for forest dependents’ livelihoods.
Small-scale infrastructure development and micro enterprise will also improve living standards of local populations depending on forests for their livelihoods. Since Tripura is bordered with the Indo-Burma region, an area designated as one of the 34 biodiversity hot spots by Conservation International, an international NGO, efforts will be made to preserve biodiversity, including a biodiversity study, eco-tourism development and enhanced community reserve management.
(3) Environmental improvement
In India, the capacity of water supply infrastructure is lagging behind fast-rising demand for water induced by rapid population growth and economic development. JBIC will thus support the Kerala Water Supply Project (II) and the Agra Water Supply Project whereby water supply facilities will be developed and the operations of water supply services will be improved.
In the Agra Water Supply Project, the water drawn from an irrigation canal of the Ganges River and will be supplied to Agra, where Taj Mahal, a World Heritage site, is located, and its neighbouring areas. The project is thus expected to improve hygiene for the citizens, including the poor, and benefit a large number of tourists visiting the city.
In the sewerage sector, the development of sewerage facilities is not keeping up with rapid inflows of population to urban areas and industrialisation. As a result, large volumes of wastewater, which far exceed the treatment capacity of sewerage systems and the natural capacity of rivers to purify water, are discharged into rivers untreated. There is thus a serious degradation of the quality of river water, as well as deterioration of the living conditions in urban areas.
JBIC will support the Amritsar Sewerage Project and the Orissa Integrated Sanitation Improvement Project whereby sewerage systems will be developed and reliable sewage treatment service will be provided to improve hygiene and the living conditions for local residents. These projects are also expected to benefit the urban poor through installation of sanitation facilities, such as community toilets in slums.
(4) Promoting knowledge assistance
To increase the sustainability of project effectiveness, JBIC will provide various forms of knowledge assistance in implementing the above projects.
In the Delhi Mass Rapid Transport System Project Phase 2 (II) and the Visakhapatnam Port Expansion Project, HIV prevention programmes will be implemented, including an awareness campaign for migrant workers to reduce the risk of contracting HIV/Aids.
In the Bangalore Distribution Upgradation Project and the Transmission System Modernization and Strengthening Project in Hyderabad Metropolitan Area, total quality management (TQM), with a bottom-up approach to sharing and achieving common quality control targets in the entire organisation, will be introduced to support the capacity building of the execution agencies.
In the Kerala Water Supply Project (II), the Agra Water Supply Project, Amritsar Sewerage Project and the Orissa Integrated Sanitation Improvement Project, a number of efforts will be made toward overall improvement in utility operations, including rehabilitation of the water distribution network and creation of a leakage detection team to reduce water leakages; proper asset management; and installation of meters and introducing diverse payment schemes to increase the collection of water and sewerage fees.
In the Andhra Pradesh Irrigation and Livelihood Improvement Project, formation of water user associations, which used to be set up after building irrigation facilities, will be formed prior to construction to increase community ownership and promote participatory operation and maintenance of irrigation facilities. In addition, training will be provided for the staff of the state irrigation department and water user associations across the state in partnership with NGOs and multilateral institutions.
During the preparation stage of the Gujarat Forestry Development Project Phase 2, a seminar was held in the state of Gujarat, in partnership with Ryukyu University and experts from Okinawa Prefecture who have expertise in order to increase the impact of aforestation and conservation of mangrove forests.
In the seminar, Japan’s experience and knowledge on mangrove forest preservation and eco-tourism were presented to the Indian participants.